Accepting card payments can be a great way to serve a broader customer base and add convenience for those who prefer cashless transactions. To start accepting card payments, you’ll need to be approved for what the credit card industry calls merchant processing. You’ll be a “merchant,” and each payment you receive via card will have fees reduced based on a number of factors. These fees, collectively called the “Discount Rate,” vary by transaction and range from .05% (super low risk, debit card) to 4.0% (very high risk, credit card). Looking to Accept Credit Cards? Learn What It Costs & Why

Processor Fee

Each transaction run on a card passes through a digital system provided to you as the merchant by a processor. This company is who you’ll obtain any hardware needed such as a point of sale device or online capabilities such as a virtual terminal or connectivity to your online store. The processor fees are somewhat negotiable and range from .1% to 1% per transaction and the fee structure is determined when you sign with a processor. This is the only part of the transaction that can be negotiated with some providers.

Assessment Fee: Visa, Mastercard, Discover

This fee is often quoted as part of “Interchange Fees” below because it is out of the control of the processor. Visa, Mastercard & Discover charge an assessment of .15%. This is commonly abbreviated as V/MC/DISC. American Express does not charge a similar fee because it is the issuing bank and makes its revenue on the interchange fees (see below).

Transaction Risk: Interchange Fees

Interchange fees are collected by the issuing bank(s) and vary depending on how risky each transaction is. Debit card interchange fees can be as low as .05% + $.21with riskier credit card interchange fees as high as 3.5% per transaction. Interestingly, American Express is both the card brand and the issuing bank. A. Type of Card: Debit or Credit Debit card transactions are generally cheaper for you as the merchant because they are coming from available cash in your client’s bank account. The use of a numerical PIN is also an added security feature. For this reason, you’ll see only debit cards accepted at certain retail establishments such as gas stations and Costco and other discount clubs. Credit card transactions mean your client is taking “credit” or a short term loan to pay you, so the risk is generally higher. B. Payment Method As a merchant, your ability to use common sense and security features to avoid fraud and chargebacks plays a large part in how much you’ll give up in Interchange Fees. Fraud is often perpetrated with stolen card numbers. Thus, if you accept credit cards in person and can utilize built-in security features such as the chips that are now present in all cards, your card activity will be considered less risky and you’ll give up less in interchange fees. Alternatively, if you only accept cards online and have no ability to verify whether or not the person making the payment is actually the owner of the card being used, you’ll typically pay higher interchange fees. C. Services or Products Offered Some products or services are more likely to be charged back and thus result in higher interchange fees. An even riskier category known as “High Risk” is reserved for industries that present significant challenges. If your business falls into this category, you may have to seek a “High-Risk Processor,” a specialist in working with industries that more common processors will not accept. Sum the 3 fees above together and that’s what you will give up for each transaction you process by charge card. Some processors will take their fees out of each transaction, depositing the net to your bank account. Others will sum all of their fees at the end of the period. Now that you understand the relationship between fees and risk, you can start to shop for the right processor. Beyond pricing, you’ll want to be sure you find the right technology capabilities that will make your life easier as a payments administrator and create the best payment experience for your clients. FINSYNC offers card payment capabilities integrated with other back office functions. Clients can pay emailed invoices by charge card and you can process a card over the phone via FINSYNC’s virtual terminal. To learn more, connect with our team.
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When running a business, it is crucial to understand your business’ finances and monitor cash flow to operate successfully. As a small business you understand that every dollar spent, as well as every dollar readily available, counts. Whether you’re looking to establish your business credit, earn cash back, gain benefits, or just need short-term funding, these business credit cards can help you on your way. Even better, with FINSYNC, you can use a credit card to pay a traditionally cash-only vendor and start earning your rewards even faster.

Best Credit Card for Establishing Credit

Are you just starting up your business and have limited or poor credit? The Wells Fargo Business Secured Credit Card is the way to go. This card will help you begin to build your business credit while also earning 1.5% cashback on all purchases made. There is also a very low annual fee of $25, which you can have waived after you’ve built up your credit. However, keep in mind that because this is a secured credit card, the rewards won’t be as good as those of unsecured cards. Regardless, this is a great starting point as you begin to build up your credit.

Best Credit Card for Startups

If you’re an up-and-coming startup with funding, the Brex Credit Card for Startups could be right for you. Brex offers up to 7x point rewards, depending on the purchase. Regardless, you’ll be sure to earn points on every dollar spent. Some other benefits of the Brex card is their instant access to a credit line after you sign up. Keep in mind that you typically will need to have at least a $100k bank balance at any given time. So if you are an early-stage business with capital in the bank, this card could be for you.

Best Credit Card for Cash Back Points

Looking to earn cashback rewards on all your purchases while not paying any annual fees? The Blue Business Plus Credit Card from American Express is a great option. With this credit card, you’ll earn 2x points on all your purchases up to $50k each year. After the $50k, you’ll earn 1x points on all purchases. If you’re looking to double down on your point earnings, then this card could be for you.

Best Credit Card for Business Travel

If your business requires you to travel a lot, the Chase Ink Business Preferred Credit Card is a top pick. This card offers 3x points on the first $150k spent on travel, phone service, internet, cable, and advertising. To sweeten the offer, they’ll even throw in a 25% bonus if you redeem your points through Chase Ultimate Rewards. If you find yourself using multiple airlines and hotel brands, you can transfer points between partnering airlines and hotels. To top it all off, you can earn an additional 100k bonus points if you spend $15,000 or more within the first 3 months.

Best Credit Card for Large Expenses

The Discover It Business Credit Card is great if you expect your business to have large expenses within the first year of opening the card. This card offers unlimited 1.5% cash back on all purchases and no annual fee. In addition, Discover will match all of the cash back you earned within your first year. That’s right, there is no minimum or maximum amount needed to be spent to receive the cash back matching offer. For example, if you spent $400 Discover will match to $800.

Best Overall Credit Card for Small Businesses

If you’re not looking to spend a lot of time finding the best card for one specific reward, and prefer a simplistic yet rewarding credit card, then the Capital One Spark Cash for Business is a good bet. This card might be the best overall for small businesses. With an unlimited 2% cash back reward on all purchases, this card can seriously reduce your expenses. The first year has no annual fee and if you spend $4,500 within the first 3 months, you’ll even get a $500 cash bonus. Also, if you have employees, you can receive employee cards for free, and increase the rate of cashback earnings.  

Payments Made Simple with FINSYNC

FINSYNC Pay allows you to preserve cash by shifting cash expenses to your card credit and amplify your rewards. Even if your vendor does not accept credit, you can pay them electronically using the credit on your card. Getting started is simple and secure. Sign up for a free trial today.
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